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Oct. 21--Caesars Palace is under federal investigation over allegations of money laundering, parent company Caesars Entertainment reported in a Securities and Exchange Commission filing today.

The company reported receiving a letter from the Financial Crimes Enforcement Network of the U.S. Department of the Treasury on Oct. 11 stating Desert Palace Inc., the subsidiary that operates Caesars Palace, was under investigation for alleged violations of the Bank Secrecy Act and "whether it is appropriate to assess a civil penalty and/or take additional enforcement action against Caesars Palace."

A representative of the company had no further comment. Late this morning, Caesars stock was down 5.6 percent to $17.65.

Caesars' SEC filing said a separate grand jury investigation on the matter is ongoing and that the company intends to cooperate with both.

"Based on proceedings to date, the registrant (Caesars) is currently unable to determine the probability of the outcome of these matters or the range of reasonably possible loss, if any," the SEC filing said.

The filing noted that in recent years, government authorities have placed greater emphasis on anti-money laundering policies and procedures with particular focus on the gaming industry.

The money-laundering allegation was reported in the same SEC filing disclosing that Caesars had withdrawn from a bid to develop a casino as a minority partner in the Suffolk Downs racecourse near Boston.

Caesars received a report from the Massachusetts Gaming Commission questioning the company's suitability as a qualifier in the state's fledgling gaming industry because of its partnership with the Gansevoort Hotel group, which had been partnering with Caesars to develop a boutique hotel at what formerly was Bill's Gamblin' Hall on the Strip.

Caesars has since severed its ties with Gansevoort, which authorities have accused of having ties with Russian mobsters, and it has withdrawn from the Massachusetts casino bid.

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